ACUITY BRANDS INC

115.77 -2.52 (-2.18%) Sell

AYI is a falling knife, continues to bleed every investor trying to catch it

13 min read

ACUITY BRANDS INC delivered massive losses on Monday. It delivered -2.18% to close at 115.77. On a day when the overall market breadth was 34%, it closed higher than 14% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing AYI]

Buy-and-Hold investors in AYI experienced a maximum drawdown of -29.9% over the last three months. It delivered -27.59% during this strong bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +4.4%.

Trend

AYI has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 23 Aug, 2016 to 9 Oct, 2018. Over the last 2 years 11 months and 10 days, AYI underperformed the SP500 index on 49% days. Which indicates that on days AYI underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months AYI was mostly loss making and delivered on average -0.48% per day. It's best return during this period (of +4.67%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -13.17%) was on Wednesday, 3 Oct, 2018. The longest stort-term trend during this period was 7 losing days, which started on 7 Nov, 2018 and ended on 15 Nov, 2018. This bearish trend lost -6.72% of investor capital.

The last 12 months saw AYI's investors making profits in 4 months and incurring losses in 8 months. AYI was less consistent in delivering monthly returs than SP500 index. AYI was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -19.04% compared to -7.28% returned by SP500 index in Oct 2018. AYI had a longer winning streak of losing months than SP500 index. It went down in 6 straight months (from Jan 2018 to Jun 2018) during which period it delivered -39.82%.

A successful man is one who can lay a firm foundation with the bricks others have thrown at him.
-- David Brinkley

AYI is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in AYI's volatility from 18 Sep, 2018 to 7 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that AYI has significant positive skewness in it's return distribution. This indicates that investors can expect AYI to recover from drawdowns quickly. Which makes AYI a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

SP500 index has more chance of extreme outcomes than AYI. Therefore, SP500 must receive a lower allocation than AYI in your portfolio. AYI usually has shorter drawdown period than the SP500 index.

On a general note (since you are interested in AYI), two mid cap instruments that deserve special mention are AMD and RHT. They have significantly outperformed the overall market.

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